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Tuesday, 4 April 2017

Whether employee of tenant is necessary party in eviction suit?

The legal effect of such eviction decree underthe Rent Act was that the possession of thetenant-firm and persons claiming through suchtenant became unauthorized. Since the tenant wasa Firm, persons connected with the internal affairsof the Firm such as its partners and the employeesworking in the Firm were also bound by the evictiondecree for the simple reason that all such persons

were claiming through the tenant-Firm.25) An employee of a tenant is never considered tobe in actual possession of tenanted premises muchless in possession in his legal right. Indeed, he isallowed to use the tenanted premises only with thepermission of his employer by virtue of his contractof employment with his employer. An employee,therefore, cannot claim any legal right of his own tooccupy or to remain in possession of the tenantedpremises while in employment of his employer oreven thereafter qua landlord for want of any privityof contract between him and the landlord in respectof the tenanted premises.26) There was, therefore, no need for the appellantto file a separate suit to claim possession of the suithouse against defendant no.1 under the general lawas he was well within his legal right to execute thedecree for eviction from the demised premises inthis very litigation not only against the originaltenant but also against all the persons who wereclaiming through such tenant. As mentioned above,defendant no.1 was such person who was held to beclaiming through the tenant being its employee andwas, therefore, bound by the decree once passedagainst his employer-tenant.27) A tenancy is a creation of contract between thetwo persons who are capable to enter into contractcalled lessor/landlord and the lessee/tenant. Thetwo persons can be either living person or juristicpersons such as Partnership Firm or a Company.28) Once the tenancy is created either orally or inwriting with respect to a land or building then it isalways subject to the relevant provisions of theTransfer of Property Act, 1882 (hereinafter referredto as “the TP Act”) and the State Rent Acts. Sections105 to 111 of the TP Act provide certain safeguards,create some statutory rights, obligations, dutieswhereas the State Rent Acts, inter alia, specify the

grounds to enable the lessor to evict thelessee/tenant from the demised premises.29) If the lessee/tenant is a living person, then insuch event, the tenant would also include his legalrepresentatives in the event of his death togetherwith his dependents living with the tenant in thetenanted premises. Likewise, if the lessee/tenant isa juristic person, i.e., partnership Firm then suchtenant would represent the interest of all thepartners of the Firm and the employees working inthe Firm. Such persons since claim through theFirm, they have no right of their own in the tenancyand in the demised property qua landlord.30) As a matter of fact, in our view, it was notnecessary for the appellants to have impleadeddefendant no.1 in the present rent proceedings. Thereason being that in rent proceedings thelessee/tenant is the only necessary or/and properparty and none else. A person, who claims throughlessee/tenant, is not a necessary party.REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No.11868 OF 2016 (ARISING OUT OF SLP (C) No. 19259 of 2010)Nandkishor Savalaram Malu (Dead)VHanumanmal G. Biyani (D)

Dated:November 29, 2016.Citation:(2017) 2 SCC 622

2) This appeal is filed against the final judgmentand order dated 23.03.2010 passed by the HighCourt of Judicature at Bombay in Civil RevisionApplication No.493/2008 allowing the said revisionapplication filed by the respondents herein.3) Facts of the case lie in a narrow compass so

are the issues involved in the appeal, a short one. Itwould, however, be clear from the facts mentionedinfra.4) The appellants are the plaintiffs (landlords)whereas the respondents are the defendants(tenant).5) One Mr. Sawalaram Shriram Malu and Mr.Nandkishore Sawalaram Malu (father and sonrespectively) jointly owned House No.47/48 situatedin Madhavnagar at Sangli (MH) (hereinafter called"the suit house"). They let out the suit house to afirm called "M/s Biyani Textile" (hereinafter referredto as "the Firm”) on a monthly rent of Rs.260/-.6) On 09.03.1982, the landlords served a quitnotice on the tenant-Firm and determined thetenancy by demanding arrears of rent for the period01.06.1980 to 28.02.1982 and possession of thesuit house. Since the Firm did not pay the arrearsas demanded and nor vacated the suit house, the

landlords were constrained to file a civil suit beingRegular Civil Suit No. 317 of 1982 claiming decreefor arrears of rent and eviction under the provisionsof the Bombay Rent Control Act. The suit was filedagainst one employee of the Firm-defendant no.1and partners of the Firm-defendant nos.2 to 9 in theCourt of IInd Civil Judge, Jr. Division, Sangli.7) Defendant no.1 filed his written statementwhereas defendant nos. 3, 4 to 9 filed their writtenstatement jointly. So far as defendant no.1 isconcerned, he set up his case contending that hewas working as employee of the Firm. He furthercontended that in 1980, there was some discussionbetween the plaintiffs and the partners of the Firmabout vacating of the suit house and pursuantthereto, the Firm vacated the suit house. The suithouse was then let out to defendant no.1 by theplaintiffs. It was then contended that plaintiff no.1died and his legal representatives not having been

brought on record, the suit could not be continuedat the instance of plaintiff no. 2 for want of anyprivity of contract between defendant no.1 and theplaintiff no.2.8) So far as the partners of the Firm, i.e.,defendant nos. 3, 4 to 9, are concerned, theycontended that they having vacated the suit housein May 1980 and cleared all their arrears of rent,they are no more liable to do anything in the caseand, therefore, suit against them is liable to bedismissed.9) The Trial Court, vide judgment dated14.10.1991, dismissed the suit against defendantno.1 whereas it was decreed against defendant nos.2 to 9. Firstly, it was held that the suit house waslet out to the Firm through their partners(defendant nos.2 & 3) and, therefore, the Firm wasthe tenant. Secondly, the Firm had committeddefaults in payment of arrears of rent and also

failed to re-pay when demanded by the plaintiff.Thirdly, defendant no.1 was an employee of theFirm. Fourthly, defendant no. 1 was not the tenantof the plaintiff as claimed by him and was inunauthorized occupation of the suit house as atrespasser. Fifthly, the Firm and its partners(defendant Nos.2 to 9) having failed to pay thearrears of rent, are liable to be evicted from the suithouse under the Bombay Rent Control Act. Sixthly,the suit did not abate on the death of plaintiff no.1because plaintiff no.2 is already on record andsufficiently represent the estate of the deceased,plaintiff no.1. Seventhly, liberty was granted to theplaintiff to file separate suit against defendant no.1under the general law to claim possession of suithouse because he was found to be in possession ofthe suit house as trespasser and no eviction decreecan be passed against a trespasser under the Rentlaws.

10) Felt aggrieved, Plaintiff no.2 filed first appealbeing R.S.A. No. 577 of 1991 before the DistrictJudge, Sangli. By order dated 03.02.2006, theDistrict Judge allowed the appeal and decreed thesuit against all the defendants as claimed by theplaintiffs. It was held that defendant no.1 being anemployee of the Firm was bound by the decreepassed against the Firm and its partners (defendantNos.2 to 9). It was further held that the defendantsfailed to prove that the Firm or/and its partnerssurrendered the possession of the suit house to theplaintiffs on 12.05.1980 and vacated the suit house.It was further held that defendant no.1 failed toprove that he became plaintiff's tenant in hisindividual capacity by entering into a fresh contractof tenancy on vacating the suit house by the originaltenant as claimed by them and lastly, thedefendants are liable to pay the mesne profits at therate of Rs.260/- per month from 01.05.1980 till

delivery of possession of the suit house to theplaintiff.11) Felt aggrieved, the defendants filed revisionapplication being C.R.A. No. 493 of 2008 before theHigh Court. While the revision application waspending, defendant no.1 died and hence his legalrepresentatives were brought on record. The HighCourt, by impugned order, though did not disturbthe factual finding of the first appellate Court yetallowed the revision and while setting aside theorder of the appellate Court, restored the order ofthe Trial Court. It is against this order, plaintiffno. 2 (landlord) felt aggrieved and filed this appealby way of special leave before this Court. During thependency of this appeal, he also died and hence hislegal representatives were brought on record tocontinue the lis.12) Heard Mr. R.S. Hegde, learned counsel for theappellants and Mr. Sukhbir Singh, learned counsel

for the respondents.13) Learned counsel for the appellants (plaintiff)while assailing the legality and correctness of theimpugned order argued three points.14) In the first place, he argued that the HighCourt was not right in allowing the revision.Learned Counsel urged that the High Court failed toeven take note of the settled legal principlesapplicable to the controversy at hand and thuscommitted jurisdictional error.15) In the second place, learned counsel arguedthat without disturbing any of the factual findingsof the first appellate Court, which were otherwisebinding on the High Court in its revisionaryjurisdiction, the High Court committedjurisdictional error in holding that once it is held inrent proceedings that defendant no.1 was atrespasser then no decree under the Rent lawscould be passed against a trespasser for his

eviction from the suit house and the remedy of theplaintiffs in such circumstances is to file regularcivil suit under the general law for obtainingpossession.16) In the third place, learned counsel argued thatthe High Court failed to see that a decree foreviction was rightly passed against the Firm and itspartners holding them as tenant and this decree,according to him, was binding on defendant no.1 onall force for the simple reason that firstly, defendantno.1 even according to his own case was anemployee of the Firm and the Courts also held himto be so. Secondly, defendant no.1 failed toestablish his independent contract of tenancy withthe plaintiffs though claimed. Thirdly, the Firmthrough their partners failed to prove that theysurrendered the vacant possession of the suit houseto the plaintiffs on 12.05.1980.17) According to learned counsel, it was, therefore,

a clear case where tenant having suffered a decreefor eviction, all persons claiming through suchtenant or/and those acting for and on behalf of thetenant-Firm, had to be dispossessed on the strengthof the decree suffered by the tenant-firm.18) On these submissions, learned Counsel for theappellants prayed for reversal of the impugned orderand restoration of the order of the first appellateCourt.19) In reply, learned counsel for the respondentssupported the impugned order and contended for itsupholding.20) Having heard the learned counsel for theparties and on perusal of the record of the case, weare inclined to accept the submissions of thelearned counsel for the appellants as, in ouropinion, it has a force.21) Indeed, we are constrained to observe thatthere was absolutely no legal basis for the High

Court to have reversed the well-reasoned order ofthe first appellate Court which had rightly reversedthe order of the Trial Court by passing decree forarrears of rent, eviction and mesne profits againstall the defendants jointly and severally. The HighCourt, unfortunately, failed to apply the settled legalprinciples applicable to the case at hand as areenumerated herein below in the light of followingfactual findings of fact recorded by the two Courtsbelow.22) Firstly, the Firm was held to be the tenantwhereas defendant no.1 was held to be Firm'semployee. Secondly, the Firm failed to prove thatthey surrendered their possession to the appellantsand cleared all arrears of rent and lastly, defendantno.1 was held to be in possession of the suit houseas “trespasser” and not as “ appellants’ tenant”.23) With these concurrent findings of fact, we areof the considered opinion that neither the Firm nor

their partners and nor defendant no.1 had any legalright to remain in possession of the suit house. Thereason being that so far as the Firm and itspartners were concerned (defendant Nos. 2 to 9),they being the tenant rightly suffered the decree forpayment of arrears of rent and eviction under theRent Act and so far as defendant no.1 wasconcerned, he was neither an owner of the suithouse nor a tenant inducted by the appellants andnor a licensee but was held to be an employee of theFirm and a rank trespasser in the suit house.24) The legal effect of such eviction decree underthe Rent Act was that the possession of thetenant-firm and persons claiming through suchtenant became unauthorized. Since the tenant wasa Firm, persons connected with the internal affairsof the Firm such as its partners and the employeesworking in the Firm were also bound by the evictiondecree for the simple reason that all such persons

were claiming through the tenant-Firm.25) An employee of a tenant is never considered tobe in actual possession of tenanted premises muchless in possession in his legal right. Indeed, he isallowed to use the tenanted premises only with thepermission of his employer by virtue of his contractof employment with his employer. An employee,therefore, cannot claim any legal right of his own tooccupy or to remain in possession of the tenantedpremises while in employment of his employer oreven thereafter qua landlord for want of any privityof contract between him and the landlord in respectof the tenanted premises.26) There was, therefore, no need for the appellantto file a separate suit to claim possession of the suithouse against defendant no.1 under the general lawas he was well within his legal right to execute thedecree for eviction from the demised premises inthis very litigation not only against the originaltenant but also against all the persons who wereclaiming through such tenant. As mentioned above,defendant no.1 was such person who was held to beclaiming through the tenant being its employee andwas, therefore, bound by the decree once passedagainst his employer-tenant.27) A tenancy is a creation of contract between thetwo persons who are capable to enter into contractcalled lessor/landlord and the lessee/tenant. Thetwo persons can be either living person or juristicpersons such as Partnership Firm or a Company.28) Once the tenancy is created either orally or inwriting with respect to a land or building then it isalways subject to the relevant provisions of theTransfer of Property Act, 1882 (hereinafter referredto as “the TP Act”) and the State Rent Acts. Sections105 to 111 of the TP Act provide certain safeguards,create some statutory rights, obligations, dutieswhereas the State Rent Acts, inter alia, specify the

grounds to enable the lessor to evict thelessee/tenant from the demised premises.29) If the lessee/tenant is a living person, then insuch event, the tenant would also include his legalrepresentatives in the event of his death togetherwith his dependents living with the tenant in thetenanted premises. Likewise, if the lessee/tenant isa juristic person, i.e., partnership Firm then suchtenant would represent the interest of all thepartners of the Firm and the employees working inthe Firm. Such persons since claim through theFirm, they have no right of their own in the tenancyand in the demised property qua landlord.30) As a matter of fact, in our view, it was notnecessary for the appellants to have impleadeddefendant no.1 in the present rent proceedings. Thereason being that in rent proceedings thelessee/tenant is the only necessary or/and properparty and none else. A person, who claims throughlessee/tenant, is not a necessary party.31) The aforementioned factors were completelyoverlooked by the High Court. It is for thesereasons, the impugned order is not legallysustainable and, therefore, deserves to be set aside.32) In the light of foregoing discussion, the appealsucceeds and is accordingly allowed with costquantified at Rs.5000/- payable by the respondentsto the appellants. The impugned order isaccordingly set aside and, in consequence thereof,the judgment/decree passed by the first appellateCourt (District Judge, Sangli) dated 03.02.2006 inCivil Appeal No.577 of 1991 is hereby restored.33) The respondents are granted three months’time to comply with the judgment and decree of thefirst appellate Court by depositing the entire moneypart of the decree as awarded therein and further tohandover the vacant possession of the suit house tothe appellant. The respondents would also pay to

the appellants three months’ rent by way ofdamages in advance and the cost awarded by thisCourt within one month and to submit the usualundertaking to this Court, failing which the decreedated 03.02.2006 be executed against therespondents forthwith on the expiry of one month. ………...................................J.[A.K. SIKRI] …...……..................................J. [ABHAY MANOHAR SAPRE]New Delhi;November 29, 2016